For the last two years you have been working as a Management accountant for Bouncy Enterprises...

  

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For the last two years you have been working as a Management accountant for Bouncy Enterprises Ltd, which makes play stations for children. You are the only qualified accountant employed. Since the firm was established four years ago, the business has expanded, and you are now beginning to find the pressure of work too much. It occurs to you that it would be a good idea to recruit an assistant to share the management accounting responsibilities. Mr. Salim has been appointed as assistant management accountant. You have been asked by management to check his knowledge about costing techniques. Following information is available regarding paly station. Selling price Variable cost per unit Choose between R.O 120 to 125) R.O. 601 Fixed cost for each month is R.O 4800, Budgeted production is 1600 units for each month. Selling cost is R.O. 20000 for the month of February. Volume of sales and production for 3 months are as follows: January 1500 1260 Production Sales February 1200 1260 Individual Assignment-CMA Semester 4-Fall 2022-23 March 1260 1260 PB 5 Required: i) Using absorption costing what is the profit for February. ii) Using Marginal costing what is the profit for February. iii) Compare the profits of February under absorption costing and marginal costing and explain the difference. 2 Marks iv) Using the absorption costing calculate the value of stock at the end of January. 1 Mark 3 Marks 3 Marks v) Using the Marginal costing calculate the value of stock at the end of January. 1 Mark vi) Using absorption and marginal costing calculate profits for the month of March, reconcile and evaluate. 5 Marks For the last two years you have been working as a Management accountant for Bouncy Enterprises Ltd, which makes play stations for children. You are the only qualified accountant employed. Since the firm was established four years ago, the business has expanded, and you are now beginning to find the pressure of work too much. It occurs to you that it would be a good idea to recruit an assistant to share the management accounting responsibilities. Mr. Salim has been appointed as assistant management accountant. You have been asked by management to check his knowledge about costing techniques. Following information is available regarding paly station. Selling price Variable cost per unit Choose between R.O 120 to 125) R.O. 601 Fixed cost for each month is R.O 4800, Budgeted production is 1600 units for each month. Selling cost is R.O. 20000 for the month of February. Volume of sales and production for 3 months are as follows: January 1500 1260 Production Sales February 1200 1260 Individual Assignment-CMA Semester 4-Fall 2022-23 March 1260 1260 PB 5 Required: i) Using absorption costing what is the profit for February. ii) Using Marginal costing what is the profit for February. iii) Compare the profits of February under absorption costing and marginal costing and explain the difference. 2 Marks iv) Using the absorption costing calculate the value of stock at the end of January. 1 Mark 3 Marks 3 Marks v) Using the Marginal costing calculate the value of stock at the end of January. 1 Mark vi) Using absorption and marginal costing calculate profits for the month of March, reconcile and evaluate. 5 Marks

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Answer i Using Absorption Costing the profit for February is calculated as follows Sales 1260 units R0 120 RO 15120 Less Variable Cost 1260 units RO 6... View the full answer